"Zero Tolerance"                 [ Back To Table of Contents ]
   Combating Insurance Fraud

    by Peter Schlactus, CIC, AAI

Why should you care about insurance fraud? With so many other priorities demanding your attention, why devote 
precious time to something the police and insurance companies should be worrying about?

It boils down to dollars and sense. Everything you do to reduce insurance claims will also reduce your insurance costs. 
Most people do not commit fraud unless they expect substantial rewards. As a result, fraudulent claims tend to be sub-
stantial claims that can really affect your rates for years to come.

With a dose of enlightened self-interest, try to appreciate the larger issues at stake. The courier industry's reputation in 
the insurance industry is precarious at best, fed mostly by equal parts of ignorance and fear. You tread a fine line between 
the truckers and the pizza delivery boys -- both of which generally pay higher premiums than you do.

It takes little to sour an insurance company on couriers. Your continued access to "affordable" insurance protection 
depends on maintaining a better record than other so-called "high-risk" delivery businesses. Each courier company 
that dedicates itself to zero tolerance for fraud helps the entire industry hold the line against higher insurance costs.


By taking a hard, active stance against fraud in your business, you can save money in two ways. First, sometimes 
you can identify and foil a criminal (that's what these guys are!) before he or she hurts you. Second, you can deter 
others from even trying to get away with false claims. Take a lesson from some of the insurance industry's toughest 
fraud-fighters, who cite deterrence as their number-one objective.

Just as home-security ads boast about how burglars will bypass an alarmed house in search of easier pickings, so 
too will the better (and most dangerous) con-artists steer clear of your business once they hear about your reputation. 
You also avoid the copycat claims from disgruntled workers who see a co-worker "get away with something" and feel 
entitled to do the same.

Fraudulent insurance claims feed on each other. It's up to you to break the cycle!


How do you spot fraud when the perpetrators are increasingly devious and sophisticated? Malcontent drivers are 
only part of a gigantic problem that includes attorneys, clinics, doctors -- entire fraud rings that steal hundreds of 
millions of dollars each year. Ultimately the cost of this crime is borne by you, the policyholders.

Experience shows that when two or more of the following factors are present in a workers' compensation claim, there 
is a chance the claim may be fraudulent. Remember, though, that these are just trends. Many perfectly legitimate 
claims are filed on Mondays, and some accidents have no witnesses.

1. Monday Morning Mess: watch for alleged injuries that occur first thing on Monday morning, or ones that happen 
late on a Friday afternoon but are not reported until Monday.

2. Employment Epiphany: watch out when the reported accident occurs immediately before or after a job termination, 
layoff, end of a big contract, or at the conclusion of seasonal work.

3. Suspicious/Same Service-Providers: watch for medical providers and/or legal consultants with a past history of 
handling suspicious claims, or situations where groups of claimants use the same doctors or lawyers.

4. Where's the Witnesses? watch out when the accident has no witnesses, and the worker's own description does 
not logically support the cause of the injury.

5. Conflicting Claims: watch for incidents where the worker's description of the accident conflicts with the medical 
history or First Report of Injury.

6. Relief Refused: watch out when the claimant refuses a diagnostic procedure to confirm the nature or extent of an 

7. Hardly Home: watch for claimants who are hard to contact at home when they are allegedly disabled.

8. Reluctant Reporting: watch out when the worker delays reporting the claim or seeks treatment without a reasonable 

9. History from Hell: watch for claimants with a track record of numerous suspicious or litigated claims -- even someone 
with 'unbelievably' terrible 'luck.'

10. Changes: watch for claimants with a history of frequently changing physicians, changing addresses, and numerous 
past employment changes.

Again, refrain from over-zealously investigating a claim simply because it exhibits one particular symptom of fraudulent 
claims. In most true cases of fraud, more than one indicator is present. Also, one must take care not to violate worker rights.


In addition to fraudulent workers compensation claims, another serious problem is having your vehicles targeted by 
criminal bands who stage auto accidents in order to collect on insurance payouts.

Their most common tactic is to lure your driver into rear-ending their car, whose occupants then allegedly develop pro-
longed and debilitating back and soft-tissue injuries. In rear-end accidents the fault is almost always assigned to the rear 
vehicle, which presumably should have been alert enough to avoid the collision.

Staged accidents usually are set up in the following situations:

On highway on-ramps

In slow-moving traffic

When leaving driveways and parking lots

Instruct drivers to be doubly on-guard in the above situations. They should maintain a safe distance from any car in front 
of them and should watch out for sudden stops for no reason.

Often your drivers are purposefully distracted in the hope that they will relax their guard and fail to notice the car ahead 
when it suddenly brakes. This generally involves a third vehicle. Perhaps a car alongside begins to drive erratically -- 
speeding up, slowing down or cutting in front. Drivers need to be made aware that this behavior may be a precursor to 
their being set up for an accident.


When you suspect fraud you should notify your insurance broker and carrier as soon as possible. The police can be 
notified but, given the negative consequences of false arrest, you should consider consulting your attorney before 
levying accusations.

Insurance companies differ dramatically in their attitude toward fraud. Some still treat false claims as a "cost of doing 
business." Others have been described by major newspapers as "pursuing fraud with the single-minded intensity of 
a pit bull."

Given the expenses faced by the real fraud-fighters, their up-front premiums may not always be the most attractive. 
Nevertheless, by keeping your claims record as clean as possible, they can actually save you a lot of money over time. 
Keep this in mind when shopping for your insurance.

Also, look for brokers with dedicated claims service departments with transportation-sector experience that can 
devote time and energy to making sure your suspicions are properly investigated.


Insurance fraud is a grave matter, and one that all courier owners and managers would do well to address. The 
direct and indirect cost savings to you and your industry can be enormous.

You can effectively combat fraud by watching for the telltale signs and spreading the message clearly through-
out your organization that fraud will be treated with zero tolerance.

You can communicate via meetings, one-on-one conversations, paycheck envelope stuffers, bulletins, posters, 
or newsletters. However you choose to do it, choose to do it today. Do not delay.

When it comes to insurance fraud it's your choice: Zero Tolerance, or a tolerance for more zeros next to your 
insurance rates!

Peter Schlactus, a Certified Insurance Counselor and  Accredited Advisor in Insurance, is Co-President of KBS International Corp., which provides specialized  insurance programs, benefits, and  risk management services to courier companies and executives nationwide. Mr. Schlactus is available to answer inquiries  at 1-888-KBS-4321 or via e-mail at peter@courierinsurance.com.

MESSENGER COURIER WORLD.             [ Back To Table of Contents ]

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